The Blog

How much does an iPhone app cost? Part II

In Part I, we explored the different types of applications. Once you have identified the type of application and the complexity of your project, it’s time to meet some of the people who will bring your app to life!

Development

Any iPhone or iPad app is going to involve developers, people who write the software code. Depending on the firm, these people may be called software developers, programmers, or engineers.

For many apps, the developers are the people who make or break your software. Good developers can mean applications that run quickly, are powerful, and generally behave as expected. Bad developers mean buggy, crash-ridden software that’s behind schedule.

An entry-level salary for a software developer in the United States is $50-60k. Developers with several years of experience are often paid $80-90k, depending on location and workload. Very simple applications (at the low end of the “Standalone App” category) may require a few weeks of developer time, more complex applications may require six months and several full-time developers. Considering an average time of two months and two developers, you’re looking at a cost of $30k in developer time.

It’s important to meet the actual people who will be responsible for developing your application. Many firms are much larger than we are in sales staff VPs, managers, etc., but have about the same number of developers! Others may simply be a friendly sales force for a low-quality overseas development shop. Don’t let anyone pull a bait and switch! It’s not enough just to evaluate the sales guys for compatibility with your project–they’re paid to be compatible. Make sure that you talk to the people who will actually be responsible for implementing the project, and ensure that they share your vision.

What about outsourcing? Can’t I cut costs there?

I’ve written about outsourcing in the past. Like everything in life, you get what you pay for. There are wonderful overseas development shops that charge rates competitive with US developers. If you are paying below market, you are asking for trouble. Far too much of our work is fixing botched outsourcing jobs that could have been done right the first time at much less cost than it will be patch it up, both in terms of development time and effort as well as lost customer trust as a result of a buggy application.

QA

A good QA department can catch bugs and problems in-house before they escape in a test build, or worse, to your customers. Every project needs a solid second pair of eyes to spot programming problems and squash bugs. Good QA engineers bill $50-75 an hour, and you probably want one hour of QA for every three hours of development to spot bugs.

Design

In addition to development work, you need designers, people who lay out the user interface, produce artwork, and do other graphical design work. It’s possible to have a good developer that drifts into some light UX design, or a good designer that drifts into light frontend development, and so you may find slightly different divisions of work across different types of firms, depending on the skillset of the individual people. Smaller application developers tend to work with outside designers or have a few contractors “on-call”, whereas larger firms can have entire graphics and UX design departments in-house. Larger corporate clients may already have an in-house design department that they’d like to use, so the background of the development firm and the makeup of their clients can have an impact on the design skill.

Again, it’s important to communicate and share your vision to the design team. It’s also important for the technical and design team to have good rapport and to get along well. Animations or dynamic visual effects may have complex technical and design requirements that require both skillsets to move in lockstep, and the last thing you want is for artwork to be produced or a technical solution to be chosen that is incompatible with the other! It’s usually important to ensure the artists or UX designers have a good track record of designing for mobile software (as opposed to graphic design, web design, etc.)

Senior UX designers with some development experience are typically worth about $80k/year. Graphic designers with more limited experience generally earn about $55k/year. With an average figure of a designer with medium experience for a month, you are looking at about $7k for typical design and artwork production.

Management

Someone needs to coordinate and oversee project development. At small firms like ours, senior developers may take this role and oversee and coordinate development, design, and the other parties in the dance. At larger firms, project management may be a dedicated department with a sizeable staff. Software development managers typically make about $120,000/yr, but usually oversee multiple projects at once, so the actual cost of that person for a single project may be closer to $5k-10k for shorter projects.

Marketing

A successful app launch often requires an extensive marketing campaign. In today’s market, it is difficult to stand out from the crowd. Retaining a PR firm can run anywhere from $5,000-$25,000/month or more. Some PR freelancers bill in the neighborhood of $100/hr for basic press release and whitepaper writing if you want more of an “a la carte” public relations approach, but the economics of the app store often dictate doing an all-or-nothing marketing push over an incremental marketing model.

Tools & Technology

In addition to personnel, it takes specialized tools to create mobile applications. Software has to be tested on a regular basis on every conceivable device, and so many firms stock up on dozens of test devices in multiple configurations. Professional developers wear out computers far faster than consumers do, and so it’s not uncommon to budget $10k in new computing equipment per developer per year.

Then you need to factor in software licensing and costs. The advent of open-source software has reduced these somewhat, but custom tools are still a requirement. Professional-class bug trackers typically run about $5,000/year for a site license. Source control hosting, testing software, database editing tools, Photoshop, and other tools of the trade have to be licensed.

Then you must factor in custom frameworks or components to be licensed for use in applications. Because we’re a very focused company with almost all of our work in iOS, we’ve invested in building an incredible volume of pre-built libraries that are more readily adapted for iOS use (see our articles on CrashBuddy and LogBuddy), and so we tend to have a reduced licensing burden than other firms, but this comes at the cost of our developers’ time to write and maintain those libraries.

Then you have your typical overhead: office space and furniture might be $1000/month/person in a midsized city. IT, servers, backups, infrastructure, hosting, e-mail, and internet access might run another $250/month/person. Benefits, taxes, and payroll probably add about 15% to the cost of every contract.

The Final Bill

Consider a fairly simple application that is on the books for two months. The cost structure might look like this:

Two developer salaries, two months: $25,000

One designer salary, one month: $7,000

Tech lead / project manager : $5,000

QA: $6,000

Office space, computers, equipment (amortized): $8,000

Software, licensing (amortized): $1,500

Benefits, taxes, payroll: $8000

The final cost to develop our simple application (leaving no profit for the firm) in this case is $60,500.
It’s important to emphasize that these are typical figures for an application of arbitrary size. Some apps have more or less development costs, more or less design costs, etc. As discussed in the first part of this article, there are many different types of applications that may require more or less responsibilities from each of the necessary disciplines.

Also factoring into the price, different firms tend to emphasize different disciplines. We are a developer-driven company, where software developers take more of an active role. There are talented design-run or management-run firms, in which those skill-sets tend to be more emphasized and tend to extend further into territory traditionally controlled by other disciplines.

In addition, however, there are a few operating costs. Considering a 12-month application life (many applications run shorter or longer), you may be looking at:

Hosting costs: $500/month for 12 months

Support contract: $500/month for 12 months

PR/marketing: $5000/month for 3 months

e.g. an additional $27,000 in the first year.
So how does our $87,500 number for a simple application stack up? Chockenberry, the developer of the award-winning Twitterific application estimated their total cost at $250,000. Twitterific is a design-heavy app in the “Pre-existing API” category, which is much more complex than our simple application. Another data point is the Barack Obama application, which reportedly cost $50-150k, also in basic agreement with our number.